Brandy Austin Law Firm PLLC
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 Business Without Written Contracts

Business Litigation Lawyer

Very frequently people enter into contracts without even consciously thinking about it. When a person walks into a barbershop, asks for a custom haircut, receives a haircut, and pays for the haircut, a contract has been performed even though neither party may have thought of this exchange as a formal contract and no written document with the terms of the haircut was produced. A haircut is an example of the types of verbal contracts that people engage in every day, but people also engage in contracts which are non-written and non-verbal. These are “Implied-in-Fact” contracts and they are created by the conduct of parties even if no words are ever exchanged between the parties, whether written or spoken.  

An implied in fact contract exists when conduct shows that there is agreement for a transaction. If a person goes to a place of business and either consumes the product sold at that business or accepts the service offered at that business, they are obligated to pay the price for the service. An average person’s trips to the grocery store, restaurant, dry cleaner or theater are all common examples of implied-in-fact contracts which may theoretically be fully enforceable. 

Some jurisdictions limit the enforceability of implied-in-fact contracts through a doctrine known as the statute of frauds, which is a principle that certain contracts must be in writing to be enforceable; common examples include real estate, contracts that take a long time to perform, or contracts in which the monetary value of the good or service is very high. Statute of frauds sometimes exists as an actual statute or act of legislature but can also exist simply as a legal principle that judges might apply. One should consult with a local contract lawyer, such as a business litigation lawyer to understand how their local jurisdiction treats the principle of the statute of frauds, and how their local jurisdiction views implied-in-fact contracts generally. 

While implied-in-fact contracts are enforceable in many jurisdictions, it can be difficult to collect evidence that an implied-in-fact contract existed, and usually the types of transactions for which implied-in-fact contracts are common are transactions for a very small amount of money, and therefore the effort to pursue enforcement may outweigh the potential benefits of enforcement. This type of cost benefit analysis is important to discuss with an attorney whenever one believes they have a strong claim. If your business uses implied-in-fact contracts, or if you would like to know about how a statute of frauds law could affect your business’s ability to conduct business without written contracts, you may want to consult with an experienced local contract lawyer.